[Note: This is a re-formatted manuscript that was originally published in
On the Horizon, 1992, 1(4), 4-5. It is posted here with permission
from Jossey Bass
Publishers.]

The use of the word virtual
in the concept of how tomorrow's corporations will be configured is taken from the
computer industry, but is not related to the computer term virtual reality, which
means, in one sense, that computers provide instantaneous, split-second processing and
immediate access of real world data and information, and in another sense, that
computers generate a three-dimensional simulated environment that is sufficiently like
actual experience that the participant feels that he or she is really there.
Rather, the term, virtual, comes from an earlier term, virtual memory, which
described the process for making a computer act as though it had more storage capacity
than it in fact did.

According to John A. Byrne, "Today's
joint ventures and strategic alliances may be an early glimpse of the business
organization of the future: The Virtual Corporation. It's a temporary net-work of
companies, even erstwhile rivals, that come together quickly to exploit fast-changing
opportunities."

Companies of tomorrow can be expected to
share costs, skills, and market access, with each company contributing its key
capabilities or core competencies to the venture without forming perm-anent
alliances or merging through either friendly means or hostile takeovers.

In many ways, the virtual corporation
will disobey all the rules of organizational design textbooks of the past. It will have no
central office, no organization chart, no hierarchy, and no vertical integration. Its
strengths will be power, fluidity, and flexibility. Says John Sculley, Chairman of Apple
Computer Inc., "Ten or twenty years from now, you'll see an explosion of
entrepreneurial industries and companies that will essentially form the real virtual
corporations. Tens of thousands of virtual organizations may come out of this." The
risks include companies' dropping the ball, leaving their virtual partners in the lurch,
risking proprietary technology and information, and losing management control critical to
corporate success.

Global competition and fast-paced
technology require more innovation, speed, and knowledge than companies can manage alone.
In order for the virtual corporations to be viable, Byrne says, "changes in antitrust
policy and intellectual-property laws may be necessary to spur cooperation among
companies." Additionally, a computing super- highway, a national infrastructure
linking computers and machine tools across the nation, must be in place before optimal
communication, which is essential to virtual corporations, can be achieved. [Byrne, J. A.
(1993, February 8). The virtual corporation. Business Week, pp. 98-103. Submitted
by Linda Blanton, Fayetteville (NC) Technical Community College]